Obamacare: Dealing a death blow to small businesses

By Michael Cahill | BLN

The major components of the Affordable Care Act, also lovingly referred to as Obamacare, are just around the corner from being implemented.

Come Jan. 1, 2014 we’ll see if Obamacare’s original mission of bringing health insurance to the uninsured of America and making badly needed changes to our healthcare system, outweighs the damage it will do the small business community.

Many smaller firms are stuck between choosing the lesser of two evils when it comes to Obamacare. In the end they could wind up just dropping coverage for their employees.

For a small business keeping coverage will mean dealing with huge rate increases that some experts have estimated could be more than 30 percent. But  dropping coverage means a severe financial penalty for not providing their workers with coverage.

Here are five reasons why Obamacare could be a death blow to small businesses come 2014.

1. Expensive Health Insurance

Obamacare aims to provide uninsured americans with affordable and comprehensive health care coverage. It attempts to do this by instituting community rating and guaranteed access for health insurance across the county.

Those two policies together mean that insurance companies cannot deny anyone health insurance and that the company cannot charge them differently than other based on health history or age. While good ideas in theory, unfortunately these changes are expected to raise the price of health insurance.

Small businesses are particularly vulnerable to any increase in insurance prices because they don’t operate with the same margins as bigger businesses. Complying with Obamacare’s employer mandate is simply going to be too costly for most small businesses.

Owners of small businesses know the benefits of providing their workers health insurance. The problem is, rising costs makes health coverage out of their reach. In short, affordability of plans is the issue.

In addiion, the insurance exchanges for small businesses designed to give employers the ability to choose from a variety of options will not be available until at least 2015. Until then, small businesses will only have one insurance option for their employees if they choose to go to the health care exchange.

That delay in the SHOP programs will put the future of a lot of small businesses in jeopardy. Downsizing or even closing up shop are possible outcomes because of the delay.

2. The economy just isn’t what it used to be

The economy has been moving at a snail’s pace the last couple of year and it’s no big surprise that business profits are down because of that. Increasing the bottom line is the main goal for most managers and Obamacare will make that more challenging for them.

The new healthcare law stands in the way of business growth as it forces companies to stay small in order to avoid Obamacare’s employer mandate. Many companies have already announced plans to cut staff or drop employee coverage and pay the penalties instead.

3. Navigating the health insurance buying process

Right after getting a root canal, choosing and buying the right health insurance plan for you or your family can be one of the more unnerving human experiences you’ll ever have. Navigating through a myriad of options and 50 page plans full of terms you never knew existed will make anyone’s hair fall out.

Now just imagine that process magnified for a small business. Scary right?

This is where the small business health exchanges would’ve come in. Proponents of the law say that the exchanges would have made it easier for employers to compare plans and purchase the appropriate one. Whether or not this will be true remains to be seen.

4. The 30 hour work week

The Obamacare employer mandate will only affect small businesses with 50 or more full-time employees. Do you know how many full-time employees you have? Apparently with Obamacare, it’s not as easy as counting heads.

According to the new healthcare law, a full-time equivalent employee is anyone who works at least 30 hours a week. Part-time workers’ hours are also added up and counted as one full-time employee for every 30 hours.

Don’t forget this definition when figuring out your staffing levels. In some cases, you might end up getting slapped with a penalty and not even know it.

5. “Obamacare, didn’t they repeal that thing?” 

Most folks aren’t even aware of the the changes that Obamacare will bring. It should be a top priority to inform the public about these changes to avoid confusion next year. But time’s a wastin’ and we’re not even close.

A poll conducted by Kaiser Family Foundation found that less than sixty percent of Americans know that Obamacare is still law, 12 percent believe that Congress has repealed it, and 7 percent think that the U.S. Supreme Court has overturned it.

As we get closer to the full implementation of Obamacare, we’re getting more glimpses of the what its opponents have been warning us all about. Whether or not the law will ultimately provide the promised coverage for millions of Americans is not be the main issue here.

Instead, it’s more than likely we’ll see people lose their jobs and businesses shut down because of the economic impact of the law. What’s the use in having access to cheaper health insurance if you don’t have a job to pay the premiums?

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